.A Happy Event
The agreement on Persian oil under which an international consortium will operate Abadan on a forty year lease from the Persian Government appears to save everybody's bacon. (It i3 discussed in detail on the financial page of the Spectator.) Most important, it has saved the present Persian regime from bankruptcy, economic and political. Less important but perhaps more remarkable, it has saved the Anglo-Iranian Oil Company from a nasty situation largely of its own making. Lastly it has saved the oil industry in general which, though , it will have to cut back production to accommodate the Persian oil, will gain immensely from the fact that the Persian agreement provides that they should operate Abadan on financial terms no less favourable than those on which they operate elsewhere. There is only one major qualification: that the agreement is. in more than a nominal sense, subject to approval by the Shah and ratification by the Majlis. This seems to be one of those rare occasions when disastrous mistakes in international affairs (and these were made by both parties to the dispute) can be unmade. Damage has certainly been done—to the Persian economy, which was never anything to be proud of; to the installations at Abadan, which will have to be re-equipped by the shareholders of the world's oil com- panies; to the reputation, though not, apparently, to the finances, of the AIOC. But the situation at the end is in many respects better than the situation at the beginning. On the new financial basis (which works out at the fifty-fifty share which the Persians were offered too late, just before they expropriated the company) the Persian Government will now receive £150 million over the next three years, every penny of which they can usefully spend on improving themselves. And two impor- tant lessons will have been demonstrated. The first is that no oil company can afford to trample on the sensitivities of the country in which it operates. The second is that no oil- bearing country in the Middle East can afford to expropriate, without compensation, the companies that exploit its oil.
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